the_long_tail.jpgMuch is being said about Web 2.0 and the Long Tail. Web 2.0 is the marketing term for next generation web sites, but what is ‘The Long Tail’?

In a nutshell, it’s being able to put those infinitely large inventories of product up on the web for consumption, and making money off niche markets. In the new world of the Internet, the 80/20 rule no longer applies. Take this quote as an example:

What’s really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you’ve got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are (see “Anatomy of the Long Tail”). In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity. Venture capitalist and former music industry consultant Kevin Laws puts it this way: “The biggest money is in the smallest sales.” Source

Amazon doesn’t make 80% of it’s money from 20% of it’s titles. They make > 50% of their money from < 50% of their titles. The Long Tail is changing the rules of Internet retailing. Note these three rules of taking advantage of the Long Tail:

  • Rule 1: Make everything available.
  • Rule 2: Cut the price in half. Now lower it.
  • Rule 3: Help me find it.
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